Alzheimer's disease (AD) is a neurodegenerative disorder characterized by the accumulation of amyloid plaques and neurofibrillary tangles in the brain. The major component of the plaques, amyloid β peptide (Aβ), is generated from amyloid precursor protein (APP) by β- and γ-secretase-mediated cleavage. Because β-secretase/beta-site APP cleaving enzyme 1 (BACE1) knockout mice produce much less Aβ and grow normally, a β-secretase inhibitor is thought to be one of the most attractive targets for the development of therapeutic interventions for AD without apparent side-effects. Here, we report the in vivo inhibitory effects of a novel β-secretase inhibitor, KMI-429, a transition-state mimic, which effectively inhibits β-secretase activity in cultured cells in a dose-dependent manner. We injected KMI-429 into the hippocampus of APP transgenic mice. KMI-429 significantly reduced Aβ production in vivo in the soluble fraction compared with vehicle, but the level of Aβ in the insoluble fraction was unaffected. In contrast, an intrahippocampal injection of KMI-429 in wild-type mice remarkably reduced Aβ production in both the soluble and insoluble fractions. Our results indicate that the β-secretase inhibitor KMI-429 is a promising candidate for the treatment of AD.